Today Jason Mark Anderman, of Becton, Dickinson and Company, and I presented a “legal quickie” for ACC‘s Law Department Management Committee on the topic of “Contract Management Systems.” This is becoming a hot topic for law departments, as more forward-thinking general counsel are realizing that their departments can make a significant contribution to corporate performance (as well as Sarbanes-Oxley compliance) by implementing better systems and processes to manage their contracts, contract processes, and contract-related information.

Jason described the steps that his company has taken to streamline their contracting processes, including flexible and comprehensive templates for procurement contracts and better processes and systems to manage the contract lifecyle and contractual information.

But as impressive as Becton, Dickinson’s results have been, the kinds of processes Jason described can only take you so far. Any company with a significant volume of contracts or contract activity should be looking at a contract lifecycle management system (CLM — also known as an enterprise contract management system) to help manage and automate the entire contract lifecycle. A CLM system can be defined as:

An integrated system that applies business rules to manage contracts of the enterprise on a worldwide basis, from request, through contract creation, negotiation, approvals, distribution, and filing in a central, searchable repository, and that allows people and systems within the organization to access, analyze, and act on contract-related information to improve efficiency, consistency, reporting, and control.

Companies that have implemented CLM systems have reported significant improvements in these and other measures. Many companies have been able to decrease the involvement of their legal departments in routine contracts by using CLM systems to implement controlled self-service contract creation processes. There are many examples of revenue improvement through better management of contract renewals and escalation clauses that in some cases are enough to pay for the costs of the systems.

Finally, tangible benefits to corporate law departments include better control and visibility of contracts and contract-related risks, the ability to share contract-related knowledge across the enterprise, and the ability to allow highly paid legal resources to focus their efforts on higher-value activities rather than administrative tasks. Many of these systems also allow legal departments to measure and report on performance and performance improvements, something many general counsel struggle with.

The International Association for Contract and Commercial Management (IACCM) is also a great source of information regarding contracting and contract management systems.

David Munn

Disclaimer: My company, Pontus Global, Inc., provides contract management systems and services using a combination of technology, processes, and people. This was an interesting call for me because I’m currently in Bangalore visiting the Pontus India team, which meant the call started at 10:30 pm Bangalore time. Although the cell phone system in India disconnected me from the call just as I was starting the presentation, I was able to reconnect fairly quickly and the rest of the call went off without a hitch.